Paris 2024: Economic boon or financial burden?

By Dr Abdel K Halabi

With seemingly little fanfare and few lead-up controversies, the 33rd Summer Olympiad Games are set to commence next month. A perennial question, particularly before the games begin is: what will the benefits be to the host city?

On the one hand, the International Olympic Committee (IOC) argues that the Games are more than a sporting event — they are also about the living legacies they create for the host city. These legacies are for the people, the city, sport in the region and country, and the Olympic venues created. The IOC has outlined these expected legacies for Paris in the article Paris 2024 legacy benefitting millions across France.

Conversely, there are many counterarguments to hosting the Games, and these have become more prominent in the past decades. For Paris 2024, news reports included polls showing that many residents think hosting the Olympics is a bad idea and they plan to leave the city during the event. Other reports have noted Parisians' displeasure with the games and that the forthcoming French parliamentary elections will be extremely unsettling.

Recent history shows that hosting the Olympics is a financial strain on a city. Reports state that Paris has spent at least $US9.7 billion ($14.5 billion) on Olympic expenses, of which $US3.25 billion is estimated to have come from French taxpayers.

The past two Summer Olympic Games made significant financial losses to the host cities. Rio 2016 is estimated to have cost $US13.1 billion and resulted in a loss of around $US2 billion, while Tokyo 2020 cost around $US13 billion — nearly double the initial estimate — and resulted in a loss of at least $US800 million.

In terms of cost, the host city must prepare and pay for the necessary infrastructure to hold the Games. This includes the stadiums and accommodation for the influx of tourists and athletes. The Olympic Village, for instance, must house 15,000 athletes, referees, and officials. Host cities must also pay for operational costs, including immigration and customs, security, medical services and sanitation. The IOC will contribute $US1.7 billion in cash and services to Paris.

The IOC has quoted an independent study stating that the games will be 'economically beneficial' for the host region. The report states that the net impact — spanning from 2018 to 2034 — comes from an external injection of economic resources that would not have happened without the Games.

The Olympic Village will be a tangible legacy of the games, particularly as it will be located in one of the most disadvantaged departments in Paris. A strategy to make the Games cheaper and more 'sober' has meant only two new permanent sports venues have been built for Paris 2024.

Another financial positive is that ticket sales are at a record high for any Olympics. It is estimated that between 2.3 and 3.1 million unique visitors with Games tickets are expected to visit Paris. This has organisers bullish that the Games can break even or make a small profit.

While Paris 2024 might struggle to make a small profit, the IOC's last two annual reports show its financial strength. The IOC — a not-for-profit organisation — reported a profit of $US888 million in 2021 and $US261 million in 2022 on growing revenue streams from broadcasting rights and The Olympic Partners (TOP) marketing rights.

The IOC claims it redistributes 90 per cent of its revenue, and because these have increased markedly in the last few years, it currently has funds of $US3.6 billion — a record amount. The IOC’s funds have in fact increased 70 per cent since 2016, and are growing on average 10 per cent every year.

There is little doubt that the Olympics will bring many extra visitors. The City of Lights and Love regularly attracts over 50 million tourists annually, and Paris will always be a top destination for travellers with its beautiful landmarks, rich history, and vibrant culture.

While Paris 2024 will also continue the tradition of swelling the IOC's coffers, the city may face an uphill battle to defy Olympic history and balance the books.

Dr Abdel K Halabi is an Associate Professor in Accounting. He is a Fellow of the Chartered Accountants of Australia and New Zealand (CAANZ) and a Certified Practising Accountant with CPA Australia. He is co-editor of Sporting Traditions the journal of the Australian Society for Sports History.

Related reading:

The financial fallout of axing Commonwealth Games

Why the IOC needs the Tokyo Olympics